Tag: shaktikanta das

To get RBI funds at 4%, can lend at up to 20%, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Last year it was fintech firms that got a boost from the digitisation wave in banking, this time small finance banks (SFBs) are getting a push.

The Rs 10,000-crore support from the Reserve Bank of India (RBI) as part of its pandemic relief measures announced on Monday is set to make small finance banks more competitive. The SFBs would get such funds at 4% for three years, which is significantly lower than their average cost of lending. The new facility would help them to get about 1-1.5% positive carry on the borrowed funds, even after investing the same amount into government securities as mandated by the central bank.

This window is an opportunity for SFBs with surplus g-secs to turn competitive as the lenders can deploy the available fund at a higher spread. Small banks generally lend at rates in the range of 10-20% depending on borrowers’ profile.

The banking system including small finance banks is sitting on a cash surplus of Rs 7.12 lakh crore.

Banks carrying surplus short-term securities could liquidate it and deploy the funds for lending.

SLTRO boost

Reserve Bank of India (RBI) has announced a special long-term repo operation (SLTRO) for small finance banks, amid the second wave of Covid cases in the country. The central bank will conduct the special operation of Rs 10,000 crore at repo rate, Das said.

“Small finance banks (SFBs) have been playing a prominent role by acting as a conduit for the last-mile supply of credit to individuals and small businesses,” Das said during an unscheduled address.

“To provide further support to small business units, micro and small industries, and other unorganised sector entities adversely affected during the current wave of the pandemic, it has been decided to conduct special three-year long-term repo operations of Rs 10,000 crore at repo rate for the SFBs, to be deployed for fresh lending of up to Rs 10 lakh per borrower,” Das said, adding that the facility will remain open till October 31, 2021.

Priority loans

The RBI also has decided to allow the classification of priority sector lending for loans given by small finance banks (SFB) to micro-finance institutions (MFI) for on-lending to individuals.

The decision has been taken to address the liquidity issues of MFIs amid the severe Covid crisis.

RBI Governor Shaktikanta Das said: “In view of the fresh challenges brought on by the pandemic and to address the emergent liquidity position of smaller MFIs, SFBs are now being permitted to reckon fresh lending to smaller MFIs (with asset size of up to Rs 500 crore) for on-lending to individual borrowers as priority sector lending.” This facility will be available up to March 31, 2022.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,

Nine ways banks will benefit from the RBI’s Covid rescue package, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The Reserve Bank of India governor Shaktikanta Das has announced a slew of measures for the economy to fight Covid. These will help banks face pandemic distress better.

RBI has announced debt recast schemes to small businesses and MSMEs which had not participated in the resolution last year. This will enable banks to offer help to the sound borrowers who are facing trouble during the second Covid wave.

The new recast scheme offers more flexibility to banks as for a borrower whose debt was recast under the resolution framework last year, that moratorium period can be increased or the residual tenure can be stretched for up to two years.

Banks are also allowed to reassess the working capital limits for small units and MSMEs whose debt has been recast earlier, giving room to lenders to help borrowers.

RBI India has not announced a moratorium on loan and interest payments during the ongoing wave, giving much relief to banks. Moratoriums affect credit discipline, and with banks likely to take a hit on the ‘interest on interest’ burden for over Rs 2 crore loans offered during the last moratorium, they may be less inclined to fresh moratoriums.

Through the Rs 10,000 crore special three-year long-term repo operations, or SLTRO, Small Finance Banks can support small business units, micro as also other unorganised-sector ones, as it allows fresh credit of up to Rs 10 lakh per borrower. SFBs can also categorise fresh loans to smaller microfinance institutions that have assets of up to Rs 500 crore as priority sector loans.

The RBI has also extended the period for the relief given earlier this year, allowing banks relief from CRR on exposures of up to Rs 25 lakh to micro, small and medium enterprises.

The central bank has allowed lenders to use 100% of their floating and counter-cyclical provisions to make specific provisions for non-performing assets (NPAs). This will help them gear up for loan losses that may arise due to severe hit to several economic segments.

With banks reluctant to lend despite Rs 6 lakh crore surplus liquidity in the system, the RBI has incentivised banks by offering extra 60 basis points for surpluses parked in the reverse repo against the loans extended by banks. These loans will be classified as priority sector lending also and the banks need not take direct exposure but can pass on through another intermediary such as NBFC.

The RBI has relieved pressure on prices of bonds held by banks as it has announced another round of the GSAP-1 for Rs 35,000 crore. The central bank will buy back bonds from the market, leading to a rise in their demand and prices. This has led to a rally in bond prices with the benchmark yield slipping below 6%.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

Bankers, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


MUMBAI: Bankers on Wednesday welcomed the measures announced by RBI as a nuanced attempt to address not just economic concerns but public health issues as well.

SBI Chairman Dinesh Kumar Khara said the unscheduled statement from Governor Shaktikanta Das has targeted moves to alleviate the troubles faced by multiple sectors.

“…the series of measures announced today reflect a novel approach. The decision to create a dedicated Rs 50,000 crore fund for ramping up Covid related healthcare infrastructure reflects RBI’s commitment to transcend boundaries by addressing not only economic health but also public health,” he said in a statement.

He also appreciated the decision to augment the lending firepower of small finance banks (SFBs) through priority sector tag, restructuring framework for individuals and small businesses, cash reserve ratio flexibility for lending to SMEs and the measures to help the state governments through ways and means advances relaxations.

MFIN, a self-regulatory organisation of micro-lenders, was very appreciative of the attempt to infuse liquidity for small MFIs by classifying and recognising SFBs’ lending to smaller NBFC-MFIs as priority sector lending.

The body’s chief executive Alok Misra said Das had met sector representatives looking at the “severity of the situation” and followed it up with the steps on Wednesday.

From the non-bank lenders, Mahindra Finance‘s Managing Director and Vice Chairman Ramesh Iyer said the measures aimed at individuals, small businesses and micro borrowers are a timely move, and welcomed the restructuring proposals.

“It’s (restructuring) an important announcement looking at the present economic landscape, this will provide as an impetus for businesses to recover from COVID-19 pandemic blues,” he said, adding that the moves to rationalise certain components of the extant KYC (know your customer) norms will support financial institutions to operate in a more efficient way.

Paul K Thomas, who heads the ESAF Small Finance Bank, said the RBI’s core focus on small lending and the last-mile delivery of credit to individuals and small businesses and the schemes to boost the provision of immediate liquidity to SFBs will go a long way in expediting economic recovery.

SFBs will now be permitted to give fresh lending to smaller micro-finance institutions (MFIs) with asset size of up to Rs 500 crore for on-lending to individual borrowers as priority sector lending.

This will add impetus to the SFBs who have been consistently playing a prominent role by acting as a conduit for the last-mile delivery of credit to individuals and small businesses, he said.

Private sector lender Kotak Mahindra Bank’s Group President for Consumer Banking, Shanti Ekambaram said the RBI has announced some timely liquidity measures that will provide relief to the most vulnerable by ensuring credit flow to individuals and small businesses and also give them greater repayment flexibility.

Viral Sheth, finance controller at Moneyboxx Finance, said several states with a huge rural population like Uttar Pradesh, Bihar and West Bengal are witnessing sharp rise in new cases and it was imperative to provide a helping hand to vulnerable sections of individuals and small businesses.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

Fino Payments Bank goes live with enhanced deposit limit of Rs 2 lakh for MSMEs, small traders, others

Banking & Finance

[ad_1]

Read More/Less


Fino Payments Bank has 410 branches and more than 25,000 banking points. (Image: Fino Payments Bank)

Fino Payments Bank on Wednesday announced increasing its end-of-the-day account balance limit to Rs 2 lakh for customers including MSMEs, small traders, and retail customers. The bank, which became profitable in the fourth quarter of FY20, went live with the enhanced limit effective May 1, 2021. The move was in line with the Reserve Bank of India’s (RBI) announcement last month to increase the maximum balance limit at the end of the day for payments banks to Rs 2 lakh from Rs 1 lakh earlier in order to boost financial inclusion. “After reviewing the performance of payments banks and to encourage their efforts for financial inclusion it was decided to enhance the limit of maximum balance at end of the day from Rs 1 lakh to Rs 2 lakh per individual customer,” a notification by RBI on April 7 had said.

“The increased deposit limit allows our customers to save more money in their account. Further, our existing sweep account mechanism continues with our partner bank wherein customers can save funds in excess of Rs 2 lakh,” said Ashish Ahuja, COO, Fino Payments Bank. Up to Rs 2 lakh in the Fino account, the existing savings interest rate will be applicable while funds in the sweep account will get interest rates as set by its partner bank Suryoday Small Finance Bank.

Also read: RBI’s relief measures for MSMEs: 4 key takeaways from Shaktikanta Das speech; experts opine mixed bag

Fino Payments Bank’s micro ATM and AePS enabled financial services distribution network including 410 branches and more than 25,000 banking points allow people to open a new bank account, get debit cards, do deposit, withdrawal, or money transfer transactions, pay utility bills, loan EMIs, and buy health, life and motor insurance. Unlike regular banks, payments banks are not allowed to lend money to their customers, they can’t open Fixed deposits or recurring deposits, and also can’t allow a balance of more than Rs 1 lakh in any account. Currently there are five other RBI-approved payments banks operating in the country viz., Airtel Payments Bank, India Post Payments Bank, Paytm Payments Bank, Jio Payments Bank, and NSDL Payments Bank.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,

RBI Governor Shaktikanta Das to make unscheduled speech today, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


By Jeanette Rodrigues

Reserve Bank of India said Governor Shaktikanta Das will make a speech Wednesday, an unscheduled appearance as ferocious new coronavirus wave devastates the country.

The address will be broadcast at 10 a.m. local time, the RBI said on Twitter, without providing further details.

The Covid-19 wave that has slammed India in recent weeks will probably worsen before it starts to taper off sometime later this month, forecasters warn. Pressure from industry groups has begun mounting on Prime Minister Narendra Modi to impose lockdowns to stem its spread, a move he has so far resisted to avoid the economic damage suffered last year.

RBI Governor @DasShaktikanta at 10:00 am today, May 05, 2021.YouTube: … https://t.co/mK8nIUhfjW” data-createdat=”1620178540000″ data-id=”1389755643620298754″>

The RBI has augmented fiscal support measures from Modi’s government with loan holidays and cash injections, as well as by cutting interest rates. It has pledged to keep monetary policy loose though its room to act has been constrained by inflation concerns.

Read: RBI steps up fight against Covid-19 second wave

Follow and connect with us on , Facebook, Linkedin



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

RBI Governor to deliver an unscheduled speech at 10 a.m.

Banking & Finance

[ad_1]

Read More/Less


Reserve Bank of India said Governor Shaktikanta Das will make a speech Wednesday, an unscheduled appearance as ferocious new coronavirus wave devastates the country.

The address will be broadcast at 10 a.m. local time, the RBI said on Twitter, without providing further details.

The Covid-19 wave that has slammed India in recent weeks will probably worsen before it starts to taper off sometime later this month, forecasters warn. Pressure from industry groups has begun mounting on Prime Minister Narendra Modi to impose lockdowns to stem its spread, a move he has so far resisted to avoid the economic damage suffered last year.

The RBI has augmented fiscal support measures from Modi’s government with loan holidays and cash injections, as well as by cutting interest rates. It has pledged to keep monetary policy loose though its room to act has been constrained by inflation concerns.

Das has been meeting with with bankers and shadow lenders since last month to discuss topics including the current economic situation, potential stress to balance sheets, credit flows and liquidity. CNBC reported Tuesday that bankers have requested relief, including payment moratoriums, citing banking sources.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

Banks gear up for asset quality deterioration as stricter lockdowns loom, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


As India stares at lockdowns and curbs for the entire May, banks and NBFCs are Lenders are bracing for a further deterioration in asset quality metrics, cheque-bounce rates and collection ratios.

Collection levels had already dropped to 10% for lenders and cheque-bounce rates had increased in segments like small and medium enterprises, commercial vehicles and microfinance.

Analysts see cheque bounce levels rise by another 3-4% while collection ratios dropping by nearly 5% in May alone

Cheque bounces are back to January 2021 levels after improving in March with Maharashtra, Madhya Pradesh, Punjab, and Telangana are seeing higher check bounce rates, HDFC Bank said in its Q4 results.

Dishonoured cheques in April (half-way through the month) have risen slightly, possibly due to some panic caused by worsening medical conditions,” HDFC said after its Q4 results.

Till the first week of April, the worst affected state was Maharashtra but now many states have been severely impacted by the fresh pandemic surge. NBFCs and small finance banks face a bigger hit.

Axis Bank too has said collections are likely to get impacted in the coming weeks and it was watching the situation closely.

No cover this time

Banks, which got protection and support by a swift moratorium on loans when the pandemic first struck, have no such cover this time.

As the second wave intensifies, most of the relief measures and schemes announced by the government and Reserve Bank of India have expired. On top of it, the central bank is non-committal on moratoriums.

In today’s conditions, there is no need for a moratorium,” RBI governor Shaktikanta Das said after the central bank’s monetary policy review. However, that statement was before the second Covid wave worsened.

RBI stress test

Bank NPAs may rise to 13.5% under the baseline stress test scenario by September, the highest in more than 22 years, according to the RBI’ financial stability report in January this year.

The gross bad loan ratio of banks which stood at 7.5% as of 30 September, could almost double to 14.8% under a severe stress scenario, RBI warned. Under the severe stress scenario, RBI has assumed a 7.6% economic contraction in the six months to 31 March and a tepid 3.8% growth in the first half of the next fiscal. However, uncertainty over vaccines and the severity of the Covid wave hobbles the 3.8% growth projection.

The last time banks saw such stress was in 1996-97 when the bad loan ratio rose to 15.7%.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

HDFC Bank, ICICI, Axis retail loan recast thrice corporate ones, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


It was not corporates but retail borrowers who rushed to avail the debt recast scheme announced by the Reserve Bank of India to alleviate pandemic stress last year.

Retail loan restructuring by top three private banks, HDFC Bank, ICICI Bank and Axis Bank, at Rs 6,600 crore, was three times the Rs 2,100 crore restructured loans by corporates, according to a report.

However, while the retail loan restructuring ended by March 31, corporate loan recasts are allowed till June end.

Fresh concerns

With a fresh surge in Covid infections and subsequent lockdowns, lenders are staring at renewed stress in loan accounts.

Sameer Narang, Chief Economist of Bank of Baroda, recently told ETBFSI that the salaried segment is still alright but the informal sector will be impacted. “Banks may not be that impacted as banks do not cater the informal sector in a big way as NBFCs does. There will be an impact on NBFCs, and they would require some degree of support. It also depends upon the pace of the second wave. We should wait and see how things pan out. If it is a phenomenon for 6-8 weeks then most of the segments will ride it over. If it lasts longer then this might be an issue for segments. It is very difficult to create a policy in an uncertain environment.”

Asset quality

HDFC Bank, ICICI, Axis retail loan recast thrice corporate ones

Ratings agency Icra too had raised concerns over the asset quality of retail loans.

The rising Covid cases have again raised concerns on the asset quality of retail loans from non-banking financial companies (NBFCs) and housing finance companies (HFCs), according to investment information agency ICRA.

The restrictions on movement will have a bearing on the collection efforts of NBFCs especially for microfinance loans where cash collections still remain dominant, it said in a report.

Commercial vehicle loans can also face stress if the inter-state restrictions are re-imposed, though even the current restrictions put in place in key geographies like Maharashtra and Delhi where non-essential services are closed will lead to lower fleet utilisation for operators.

However, said ICRA, housing loans are expected to remain most resilient as was seen even last year given the secured nature of asset class and priority given by borrowers to repay them.

No relief measures

Banks, which got protection and support by a swift moratorium on loans when the pandemic first struck, have no such cover this time.

As the second wave intensifies, most of the relief measures and schemes announced by the government and Reserve Bank of India have expired. On top of it, the central bank is non-committal on moratoriums.
“In today’s conditions, there is no need for a moratorium,” RBI governor Shaktikanta Das had said after the central bank’s monetary policy review.

Also, a spike in overdue loans after the lifting of the moratorium has been worrying analysts.

“The level of loans in overdue categories has increased after the moratorium has been lifted and the impact on asset quality will be spread over FY2021 and FY2022 as various interventions and relief measures have prevented a large one-time hit on profitability and capital of banks,” Icra said in a report.

Subscribe to ETBFSI Daily Newsletter and stay updated.
https://bfsi.economictimes.indiatimes.com/etnewsletter.php



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,

Remain watchful of evolving situation, push credit flows: RBI Guv to banks

Banking & Finance

[ad_1]

Read More/Less


Deputy Governors M K Jain, M Rajeswar Rao and a few other senior officials of RBI also attended the meetings.

RBI Governor Shaktikanta Das on Monday asked banks to remain watchful of the evolving situation and emphasised the importance of credit flow to sustain the nascent economic recovery amid rising coronavirus cases.

In his meeting with MD/CEOs of public sector banks and select private sector lenders, Das also highlighted the recent policy measures taken by RBI to further support the ongoing recovery while preserving financial stability, the central bank said in a statement.

Das touched upon the importance of credit flows in sustaining the nascent economic recovery and advised banks to remain watchful of the evolving situation and continue taking measures proactively for maintaining their business continuity, sharpening business strategies and raising adequate capital for strengthening balance sheets.

“He also emphasised the need for banks to maintain a close vigil on the payments and other IT systems operated by banks and fortifying those for enhanced efficiency and resilience so as to offer seamless and uninterrupted customer service,” RBI said.

Among other matters, progress in the implementation of COVID Resolution Framework, outlook on stresses assets and capital augmentation came up for discussion.

The liquidity scenario and monetary transmission, and credit flows to different sectors, including MSMEs, and retail, were also discussed during the meeting held through video-conferencing.

Deputy Governors M K Jain, M Rajeswar Rao and a few other senior officials of RBI also attended the meetings.

There are concerns that surging coronavirus cases and resulting localised restrictions might hamper cash flow and result in stressed assets.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

RBI raises Paytm, wallet accounts limit to Rs 2 lakh; opens RTGS, NEFT connectivity with payment operators

Personal Finance

[ad_1]

Read More/Less


The RBI also increased the prepaid payment instrument account limit to Rs 2 lakh per individual.
(Image: REUTERS)

The Reserve Bank of India would now allow RTGS and NEFT connectivity with non-bank payment system operators, paving way for UPI interoperability. Along with this, the RBI also increased the maximum balance per customer for payments banks to Rs 2 lakh per individual from Rs 1 lakh earlier. “This facility is expected to minimise settlement risk in the financial system and enhance the reach of digital financial services to all user segments,” RBI Governor Shaktikanta Das said after the first bi-monthly Monetary Policy Committee meeting of this financial year.

Centralised payment systems such as RTGS and NEFT, operated by the RBI, was so far restricted to only banks with a few exceptions. RBI today announced that it is proposing to enable non-bank payment systems like PPIs, card networks, White label ATM operators, among others to take direct membership in the central bank run RTGS and NEFT. 

RBI had earlier in October 2018 issued guidelines for adoption of inter-operability on a voluntary basis for full KYC PPIs. “As migration toward inter-operability has not been significant, it is now proposed to make inter-operability mandatory for full KYC PPIs and for all payment acceptance infrastructure,” the RBI Governor said. To incentivize the same, RBI will increase the outstanding limit of such PPIs to Rs 2 lakh from the Rs 1 lakh limit earlier. The central bank said that it will issue a separate circular for the changes announced.

Further, in an attempt to incentivised people to carry less cash and consequently perform more digital transactions, RBI has also proposed to allow the facility of cash withdrawal, for full-KYC PPIs of non-bank PPI issuers. 

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , , , ,
1 … 4 5 6 7 8